261 Phil.

266
EN BANC
Adm. Matter No. 1625, February 12, 1990
ANGEL L. BAUTISTA, COMPLAINANT, VS. ATTY. RAMON A.
GONZALES, RESPONDENT.

RESOLUTION
PER CURIAM:
In a verified complaint filed by Angel L. Bautista on May 19,
1976, respondent Ramon A. Gonzales was charged with
malpractice, deceit, gross misconduct and violation of
lawyer's oath. Required by this Court to answer the charges
against him, respondent filed on June 19, 1976 a motion for
a bill of particulars asking this Court to order complainant to
amend his complaint by making his charges more definite. In
a resolution dated June 28, 1976, the Court granted
respondent's motion and required complainant to file an
amended complaint. On July 15, 1976, complainant
submitted an amended complaint for disbarment, alleging
that respondent committed the following acts:
1. Accepting a case wherein he agreed with his clients,
namely, Alfaro Fortunado, Nestor Fortunado and Editha
Fortunado [hereinafter referred to as the Fortunados] to pay
all expenses, including court fees, for a contingent fee of
fifty percent (50%) of the value of the property in litigation;
2. Acting as counsel for the Fortunados in Civil Case No. Q-
15143, wherein Eusebio Lopez, Jr. is one of the defendants
and, without said case being terminated acting as counsel
for Eusebio Lopez, Jr. in Civil Case No. Q-15490;
3. Transferring to himself one-half of the properties of the
Fortunados, which properties are the subject of the litigation
in Civil Case No. Q-15143, while the case was still pending;
4. Inducing complainant, who was his former client, to enter
into a contract with him on August 30, 1971 for the
development into a residential subdivision of the land
involved in Civil Case No. Q-15143, covered by TCT No. T-
1929, claiming that he acquired fifty percent (50%) interest
thereof as attorney's fees from the Fortunados, while
knowing fully well that the said property was already sold at
a public auction on June 30, 1971, by the Provincial Sheriff
of Lanao del Norte and registered with the Register of Deeds
of Iligan City;
5. Submitting to the Court of First Instance of Quezon City
falsified documents purporting to be true copies of
Addendum to the Land Development Agreement dated
August 30, 1971" and submitting the same document to the
Fiscal's Office of Quezon City, in connection with the
complaint for estafa filed by respondent against complainant
designated as I.S. No. 75-12936;
6. Committing acts of treachery and disloyalty to
complainant who was his client;
7. Harassing the complainant by filing several complaints
without legal basis before the Court of First Instance and the
Fiscals Office of Quezon City;
8. Deliberately misleading the Court of First Instance and
the Fiscal's Office by making false assertion of facts in his
pleadings;
9. Filing petitions "cleverly prepared (so) that while he does
not intentionally tell a lie, he does not tell the truth either."
Respondent filed an answer on September 29, 1976 and an
amended answer on November 18, 1976, denying the
accusations against him. Complainant filed a reply to
respondent's answer on December 29, 1976 and on March
24, 1977 respondent filed a rejoinder.
In a resolution dated March 16, 1983, the Court referred the
case to the Office of the Solicitor General for investigation,
report and recommendation. In the investigation conducted
by the Solicitor General, complainant presented himself as a
witness and submitted Exhibits "A" to "PP", while
respondent appeared both as witness and counsel and
submitted Exhibits "1" to "11". The parties were required to
submit their respective memoranda.
On May 16, 1988 respondent filed a motion to dismiss the
complaint against him, claiming that the long delay in the
resolution of the complaint against him constitutes a
violation of his constitutional right to due process and
speedy disposition of cases. Upon order of the Court, the
Solicitor General filed a comment to the motion to dismiss on
August 8, 1988, explaining that the delay in the investigation
of the case was due to the "numerous requests for
postponement of scheduled hearings filed by both parties
and the motions for extension of time to file their respective
memoranda." [Comment of the Solicitor General, p. 2;
Record, p. 365.] Respondent filed a reply to the Solicitor
General's comment on October 26, 1988. In a resolution
dated January 16, 1989 the Court required the Solicitor
General to submit his report and recommendation within
thirty (30) days from notice.
On April 11, 1989, the Solicitor General submitted his report
with the recommendation that Atty. Ramon A. Gonzales be
suspended for six (6) months. The Solicitor General found
that respondent committed the following acts of
misconduct:
a. transferring to himself one-half of the properties of his
clients during the pendency of the case where the properties
were involved;
b. concealing from complainant the fact that the property
subject of their land development agreement had already
been sold at a public auction prior to the execution of said
agreement; and
c. misleading the court by submitting alleged true copies of a
document where two signatories who had not signed the
original (or even the xerox copy) were made to appear as
having fixed their signatures [Report and Recommendation
of the Solicitor General, pp. 17-18; Rollo, pp. 403-404.]
Respondent then filed on April 14, 1989 a motion to refer the
case to the Integrated Bar of the Philippines (IBP) for
investigation and disposition pursuant to Rule 139-B of the
Revised Rules of Court. Respondent manifested that he
intends to submit more evidence before the IBP. Finally, on
November 27, 1989, respondent filed a supplemental motion
to refer this case to the IBP, containing additional arguments
to bolster his contentions in his previous pleadings.
I.
Preliminarily, the Court will dispose of the procedural issue
raised by respondent. It is respondent's contention that the
preliminary investigation conducted by the Solicitor General
was limited to the determination of whether or not there is
sufficient ground to proceed with the case and that under
Rule 139 the Solicitor General still has to file an
administrative complaint against him. Respondent claims
that the case should be referred to the IBP since Section 20
of Rule 139-B provides that:
This Rule shall take effect on June 1, 1988 and shall
supersede the present Rule 139 entitled "DISBARMENT OR
SUSPENSION OF ATTORNEYS." All cases pending
investigation by the Office of the Solicitor General shall be
transferred to the Integrated Bar of the Philippines Board of
Governors for investigation and disposition as provided in
this Rule except those cases where the investigation has
been substantially completed.
The above contention of respondent is untenable. In the first
place, contrary to respondent's claim, reference to the IBP of
complaints against lawyers is not mandatory upon the Court
(Zaldivar v. Sandiganbayan, G.R. Nos. 79690-707; Zaldivar v.
Gonzales, G.R. No. 80578, October 7, 1988.] Reference of
complaints to the IBP is not an exclusive procedure under
the terms of Rule 139-B of the Revised Rules of Court [Ibid.]
Under Sections 13 and 14 of Rule 139-B, the Supreme Court
may conduct disciplinary proceedings without the
intervention of the IBP by referring cases for investigation to
the Solicitor General or to any officer of the Supreme Court
or judge of a lower court. In such a case, the report and
recommendation of the investigating official shall be
reviewed directly by the Supreme Court. The Court shall
base its final action on the case on the report and
recommendation submitted by the investigating official and
the evidence presented by the parties during the
investigation.
Secondly, there is no need to refer the case to the IBP since
at the time of the effectivity of Rule 139-B [June 1, 1988] the
investigation conducted by the Office of the Solicitor General
had been substantially completed. Section 20 of Rule 139-B
provides that only pending cases, the investigation of which
has not been substantially completed by the Office of the
Solicitor General, shall be transferred to the IBP. In this case
the investigation by the Solicitor General was terminated
even before the effectivity of Rule 139-B. Respondent himself
admitted in his motion to dismiss that the Solicitor General
terminated the investigation on November 26, 1986, the
date when respondent submitted his reply memorandum
[Motion to Dismiss, p. 1; Record, p. 353.]
Thirdly, there is no need for further investigation since the
Office of the Solicitor General already made a thorough and
comprehensive investigation of the case. To refer the case to
the IBP, as prayed for by the respondent, will result not only
in duplication of the proceedings conducted by the Solicitor
General but also to further delay in the disposition of the
present case which has lasted for more than thirteen (13)
years.
Respondent's assertion that he still has some evidence to
present does not warrant the referral of the case to the IBP.
Considering that in the investigation conducted by the
Solicitor General respondent was given ample opportunity to
present evidence, his failure to adduce additional evidence is
entirely his own fault. There was therefore no denial of
procedural due process. The record shows that respondent
appeared as witness for himself and presented no less than
eleven (11) documents to support his contentions. He was
also allowed to cross-examine the complainant who
appeared as a witness against him.
II.
The Court will now address the substantive issue of whether
or not respondent committed the acts of misconduct alleged
by complainant Bautista.
After a careful review of the record of the case and the
report and recommendation of the Solicitor General, the
Court finds that respondent committed acts of misconduct
which warrant the exercise by this Court of its disciplinary
power.
The record shows that respondent prepared a document
entitled "Transfer of Rights" which was signed by the
Fortunados on August 31, 1971. The document assigned to
respondent one-half (1/2) of the properties of the Fortunados
covered by TCT No. T-1929, with an area of 239,650 sq. m.,
and TCT No. T-3041, with an area of 72,907 sq. m., for and in
consideration of his legal services to the latter. At the time
the document was executed, respondent knew that the
abovementioned properties were the subject of a civil case
[Civil Case No. Q-15143] pending before the Court of First
Instance of Quezon City since he was acting as counsel for
the Fortunados in said case [See Annex "B" of Original
Complaint, p. 12; Rollo, p. 16.] In executing the document
transferring one-half (1/2) of the subject properties to
himself, respondent violated the law expressly prohibiting a
lawyer from acquiring his client's property or interest
involved in any litigation in which he may take part by virtue
of his profession [Article 1491, New Civil Code.] This Court
has held that the purchase by a lawyer of his client's
property or interest in litigation is a breach of professional
ethics and constitutes malpractice [Hernandez v. Villanueva,
40 Phil. 774 (1920); Go Beltran v. Fernandez, 70 Phil. 248
(1940).]
However, respondent notes that Canon 10 of the old Canons
of Professional Ethics, which states that "[t]he lawyer should
not purchase any interests in the subject-matter of the
litigation which he is conducting," does not appear anymore
in the new Code of Professional Responsibility. He therefore
concludes that while a purchase by a lawyer of property in
litigation is void under Art. 1491 of the Civil Code, such
purchase is no longer a ground for disciplinary action under
the new Code of Professional Responsibility.
This contention is without merit. The very first Canon of the
new Code states that "a lawyer shall uphold the Constitution,
obey the laws of the land and promote respect for law and
legal process" (Italics supplied). Moreover, Rule 138, Sec. 3
of the Revised Rules of Court requires every lawyer to take
an oath to "obey the laws [of the Republic of the Philippines]
as well as the legal orders of the duly constituted authorities
therein." And for any violation of this oath, a lawyer may be
suspended or disbarred by the Supreme Court (Rule 138,
Sec. 27, Revised Rules of Court.] All of these underscore the
role of the lawyer as the vanguard of our legal system. The
transgression of any provision of law by a lawyer is a
repulsive and reprehensible act which the Court will not
countenance. In the instant case, respondent, having
violated Art. 1491 of the Civil Code, must be held
accountable both to his client and to society.
Parenthetically, it should be noted that the persons
mentioned in Art. 1491 of the Civil Code are prohibited from
purchasing the property mentioned therein because of their
existing trust relationship with the latter. A lawyer is
disqualified from acquiring by purchase the property and
rights in litigation because of his fiduciary relationship with
such property and rights, as well as with the client. And it
cannot be claimed that the new Code of Professional
Responsibility has failed to emphasize the nature and
consequences of such relationship. Canon 17 states that "a
lawyer owes fidelity to the cause of his client and he shall be
mindful of the trust and confidence reposed in him." On the
other hand, Canon 16 provides that "a lawyer shall hold in
trust all moneys and properties of his client that may come
into his possession. Hence, notwithstanding the absence of
a specific provision on the matter in the new Code, the
Court, considering the abovequoted provisions of the new
Code in relation to Art. 1491 of the Civil Code, as well as the
prevailing jurisprudence, holds that the purchase by a
lawyer of his client's property in litigation constitutes a
breach of professional ethics for which a disciplinary action
may be brought against him.
Respondent's next contention that the transfer of the
properties was not really implemented, because the land
development agreement on which the transfer depended was
later rescinded, is untenable. Nowhere is it provided in the
Transfer of Rights that the assignment of the properties of
the Fortunados to respondent was subject to the
implementation of the land development agreement. The last
paragraph of the Transfer of Rights provides that:
. . . for and in consideration of the legal services of ATTY.
RAMON A. GONZALES, Filipino, married to Lilia Yusay, and
a resident of 23 Sunrise Hill, New Manila, Quezon City,
rendered to our entire satisfaction, we hereby, by these
presents, do transfer and convey to the said ATTY. RAMON
A. GONZALES, his heirs, successor, and assigns, one-half
(1/2) of our rights and interests in the above-described
property, together with all the improvements found therein
[Annex "D" of the Complaint, Record, p. 28; Italics supplied.]
It is clear from the foregoing that the parties intended the
transfer of the properties to respondent to be absolute and
unconditional, and irrespective of whether or not the land
development agreement was implemented.
Another misconduct committed by respondent was his
failure to disclose to complainant, at the time the land
development agreement was entered into, that the land
covered by TCT No. T-1929 had already been sold at a public
auction. The land development agreement was executed on
August 31, 1977 while the public auction was held on June
30, 1971.
Respondent denies that complainant was his former client,
claiming that his appearance for the complainant in an anti-
graft case filed by the latter against a certain Gilbert
Teodoro was upon the request of complainant and was
understood to be only provisional. Respondent claims that
since complainant was not his client, he had no duty to warn
complainant of the fact that the land involved in their land
development agreement had been sold at a public auction.
Moreover, the sale was duly annotated at the back of TCT
No. T-1929 and this, respondent argues, serves as
constructive notice to complainant so that there was no
concealment on his part.
The above contentions are unmeritorious. Even assuming
that the certificate of sale was annotated at the back of TCT
No. T-1929, the fact remains that respondent failed to inform
the complainant of the sale of the land to Samauna during
the negotiations for the land development agreement. In so
doing, respondent failed to live up to the rigorous standards
of ethics of the law profession which place a premium on
honesty and condemn duplicitous conduct. The fact that
complainant was not a former client of respondent does not
exempt respondent from his duty to inform complainant of
an important fact pertaining to the land which is subject of
their negotiation. Since he was a party to the land
development agreement, respondent should have warned the
complainant of the sale of the land at a public auction so that
the latter could make a proper assessment of the viability of
the project they were jointly undertaking. This Court has
held that a lawyer should observe honesty and fairness even
in his private dealings and failure to do so is a ground for
disciplinary action against him [Custodio v. Esto, Adm. Case
No. 1113, February 22, 1978, 81 SCRA 517.]
Complainant also charges respondent with submitting to the
court falsified documents purporting to be true copies of an
addendum to the land development agreement.
Based on evidence submitted by the parties, the Solicitor
General found that in the document filed by respondent with
the Court of First Instance of Quezon City, the signatories to
the addendum to the land development agreement
namely, Ramon A. Gonzales, Alfaro T. Fortunado, Editha T.
Fortunado, Nestor T. Fortunado, and Angel L. Bautista
were made to appear as having signed the original document
on December 9, 1972, as indicated by the letters "(SGD.)"
before each of their names. However, it was only respondent
Alfaro Fortunado and complainant who signed the original
and duplicate original (Exh. "2") and the two other parties,
Edith Fortunado and Nestor Fortunado, never did. Even
respondent himself admitted that Edith and Nestor
Fortunado only signed the xerox copy (Exh. "2-A") after
respondent wrote them on May 24, 1973, asking them to
sign the said xerox copy attached to the letter and to send it
back to him after signing [Rejoinder to Complainant's Reply,
pp. 4-6; Rollo, pp. 327-329.] Moreover, respondent
acknowledged that Edith and Nestor Fortunado had merely
agreed by phone to sign, but had not actually signed, the
alleged true copy of the addendum as of May 23, 1973
[Respondent's Supplemental Motion to Refer this Case to the
Integrated Bar of the Philippines, p. 16.] Thus, when
respondent submitted the alleged true copy of the addendum
on May 23, 1973 as Annex "A" of his Manifestation filed with
the Court of First Instance of Quezon City, he knowingly
misled the Court into believing that the original addendum
was signed by Edith Fortunado and Nestor Fortunado. Such
conduct constitutes willful disregard of his solemn duty as a
lawyer to act at all times in a manner consistent with the
truth. A lawyer should never seek to mislead the court by an
artifice or false statement of fact or law [Section 20 (d), Rule
138, Revised Rules of Court; Canon 22, Canons of
Professional Ethics; Canon 10, Rule 10.01, Code of
Professional Responsibility.]
Anent the first charge of complainant, the Solicitor General
found that no impropriety was committed by respondent in
entering into a contingent fee contract with the Fortunados
[Report and Recommendation, p. 8; Record, p. 394.) The
Court, however, finds that the agreement between the
respondent and the Fortunados, which provides in part that:
We [the Fortunados] agree on the 50% contingent fee,
provided, you [respondent Ramon Gonzales] defray all
expenses, for the suit, including court fees.
 Alfaro T. Fortunado
[signed]
Editha T. Fortunado
[signed]
Nestor T. Fortunado
[signed]

CONFOR
ME

Ramon A. Gonzales
[signed]

[Annex "A" to the Complaint, Record, p. 4.]

is contrary to Canon 42 of the Canons of Professional Ethics
which provides that a lawyer may not properly agree with a
client to pay or bear the expenses of litigation. [See also
Rule 16.04, Code of Professional Responsibility.] Although a
lawyer may in good faith, advance the expenses of litigation,
the same should be subject to reimbursement. The
agreement between respondent and the Fortunados,
however, does not provide for reimbursement to respondent
of litigation expenses paid by him. An agreement whereby an
attorney agrees to pay expenses of proceedings to enforce
the client's rights is champertous [JBP Holding Corp. v. U.S.
166 F. Supp. 324 (1958).] Such agreements are against
public policy especially where, as in this case, the attorney
has agreed to carry on the action at his own expense in
consideration of some bargain to have part of the thing in
dispute [See Sampliner v. Motion Pictures Patents Co., et al.,
255 F. 242 (1918).] The execution of these contracts violates
the fiduciary relationship between the lawyer and his client,
for which the former must incur administrative sanctions.
The Solicitor General next concludes that respondent cannot
be held liable for acting as counsel for Eusebio Lopez, Jr. in
Civil Case No. Q-15490 while acting as counsel for the
Fortunados against the same Eusebio Lopez, Jr. in Civil Case
No. Q-15143. The Court, after considering the record,
agrees with the Solicitor General's findings on the matter.
The evidence presented by respondent shows that his
acceptance of Civil Case No. Q-15490 was with the
knowledge and consent of the Fortunados. The affidavit
executed by the Fortunados on June 23, 1976 clearly states
that they gave their consent when respondent accepted the
case of Eusebio Lopez, Jr. [Affidavit of Fortunados, dated
June 23, 1976; Rollo, p. 198.] One of the recognized
exceptions to the rule against representation of conflicting
interests is where the clients knowingly consent to the dual
representation after full disclosure of the facts by counsel
[Canon 6, Canons of Professional Ethics; Canon 15, Rule
15.03, Code of Professional Responsibility.]
Complainant also claims that respondent filed several
complaints against him before the Court of First Instance
and the Fiscal's Office of Quezon City for the sole purpose of
harassing him.
The record shows that at the time of the Solicitor General's
investigation of this case, Civil Case No. Q-18060 was still
pending before the Court of First Instance of Quezon City,
while the complaints for libel (I.S. No. 76-5912) and perjury
(I.S. No. 5913) were already dismissed by the City Fiscal for
insufficiency of evidence and lack of interest, respectively
[Report and Recommendation, pp. 16-17; Rollo, pp. 402-
403.] The Solicitor General found no basis for holding that
the complaints for libel and perjury were used by respondent
to harass complainant. As to Civil Case No. Q-18060,
considering that it was still pending resolution, the Solicitor
General made no finding on complainant's claim that it was a
mere ploy by respondent to harass him. The determination of
the validity of the complaint in Civil Case No. Q-18060 was
left to the Court of First Instance of Quezon City where the
case was pending resolution.
The Court agrees with the above findings of the Solicitor
General, and accordingly holds that there is no basis for
holding that the respondent's sole purpose in filing the
aforementioned cases was to harass complainant.
Grounds 6, 8 and 9 alleged in the complaint need not be
discussed separately since the above discussion on the other
grounds sufficiently cover these remaining grounds.
The Court finds clearly established in this case that on four
counts the respondent violated the law and the rules
governing the conduct of a member of the legal profession.
Sworn to assist in the administration of justice and to uphold
the rule of law, he has "miserably failed to live up to the
standards expected of a member of the Bar." [Artiaga v.
Villanueva, Adm. Matter No. 1892, July 29, 1988, 163 SCRA
638, 647.] The Court agrees with the Solicitor General that,
considering the nature of the offenses committed by
respondent and the facts and circumstances of the case,
respondent lawyer should be suspended from the practice of
law for a period of six (6) months.
WHEREFORE, finding that respondent Attorney Ramon A.
Gonzales committed serious misconduct, the Court Resolved
to SUSPEND respondent from the practice of law for SIX (6)
months effective from the date of his receipt of this
Resolution. Let copies of this Resolution be circulated to all
courts of the country for their information and guidance, and
spread in the personal record of Atty. Gonzales.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras,
Feliciano, Gancayco, Padilla, Bidin, and Cortes JJ., concur.
Gutierrez, Jr., Grio-Aquino, Medialdea, and Regalado, JJ., no
part. Had no part in deliberations.
Sarmiento, J., no part; he is a close neighbor.